Why Today’s Young Entrepreneurs May Be Better Off Than You Think

Fewer students are defaulting on their loans, a positive indicator for entrepreneurship in the coming decade. Originally appeared on Inc.com.

23-year-old Matt McManus is only months out of college–long enough to invest everything in his sandal company Bokos, yet short enough that he hasn’t even considered his student loans. IMAGE: Courtesy Subject

Matt McManus graduated college this past May with $40,000 in student loan debt and not a dime to his name.

By April 2013, the then-junior at the University of Wisconsin-Madison had invested his life savings into starting a sandal company, Bokos, with his brother James. He never really considered his student loans. After all, he had a product he considered a sure thing, so paying off his debt would come–just later. Did he ever consider the risk of defaulting? “No,” the now-23-year-old says. “There’s always that risk, but the way I viewed it was, ‘I’m young. I think I’ve got some flexibility.’”

McManus is emblematic of the legions of startup founders taking a gamble in the face of significant student debt–it’s one of the biggest obstacles to this generation’s entrepreneurial dreams, and while many find themselves able to manage the task, others find themselves defaulting on their loans or opting out of entrepreneurship altogether. A recent report from the Kauffman Foundation, places the overall student debt tally at roughly $1.2 trillion. That’s equivalent to nearly $30,000 of debt per graduating senior, up about $10,000 in the last decade.

To make matters worse, new startups haven’t created as many jobs as they have in previous post-recessionary periods, says Dane Stangler, the Kauffman Foundation’s vice president of research and policy. “We’ve only just reached pre-recession employment,” he notes, adding that the recession after the dot-com collapse in 2001 triggered a similar jobless recovery.